Corning rallies on turnaround forecast

CarolynPritchard

CORNING, N.Y. (CBS.MW) - Corning shares rallied 17 percent Friday after the company said it believes the first quarter will represent a "bottoming out" across its businesses and provided a financial outlook that was in line with expectations.

Shares of the optical fiber maker shares ended the session up $1.08 at $7.52.

Corning
GLW, -2.07%
said Friday morning that losses for the quarter ending March are expected to be 14 to 18 cents a share, and revenue is anticipated to come in at $925 million to $950 million.

Analysts surveyed by Thomson Financial/First Call are currently forecasting losses of 17 cents a share on revenue of $944.3 million.

"We believe that the first quarter of this year will represent a bottoming out across our businesses as revenues are expected to approximate those of the fourth quarter last year," John Loose, Corning's chief executive, said in a company statement.

But he added, "Although it appears that our revenue stream will improve as the year plays out, the pace and timing of recovery is uncertain."

The sentiment was echoed by Wendell P. Weeks, president of Corning Optical Communications, who said, "We think we are at bottom, but we continue to be unsure when the recovery actually will begin."

Corning said it will invest about $550 million in research, development and engineering projects in such areas as optical transparency in telecommunications networks, ceramic substrates and particulate filter technologies for diesel engines and ultra-thin substrates for a new generation of flat screen liquid crystal displays.

Weeks said that when the recovery begins, the growth will be led by optical fiber build-outs in the metro and access markets and by the lighting of previously installed long-haul fibers.

Corning expects fiber shipments to increase at least 15 percent in the first quarter of 2002 over the fourth quarter of last year.

The company expects capital spending for 2002 to be about $500 million.

Corning said it ended 2001 with $2.2 billion in cash and continues to have an unused and committed $2 billion revolving credit line available. The firm said it expects to be free cash flow positive late in the year but will have negative free cash flow for the total year.

Corning was to outline its strategy at its annual investors' gathering in New York City Friday.

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